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on Industrial Competition |
| By: | Lin William Cong; Xiaohong Huang; Siguang Li; Jian Ni |
| Abstract: | We revisit the relationship between firm competition and real efficiency in a novel setting with informational feedback from financial markets. Although intensified competition can decrease market concentration in production, it reduces the value of proprietary information (e.g., market prospects) for speculators and discourages information production and price discovery in financial markets. Therefore, competition generates non-monotonic welfare effects through two competing channels: market concentration and information production. When information reflected in stock prices is sufficiently valuable for production decisions, competition can harm both consumer welfare and real efficiency. Our results are robust under cross-asset trading and learning and highlight the importance of considering the interaction between product market and financial market in antitrust policy, e.g., concerning the regulation of horizontal mergers. |
| JEL: | D61 D83 G14 G34 G40 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32944 |
| By: | D’Annunzio, Anna; Russo, Antonio |
| Abstract: | We study transaction fees applied by marketplace platforms where sellers (e.g., app developers) adopt freemium pricing. An ad valorem transaction fee reduces quality distortions introduced by the price-discriminating seller, thereby increasing consumer surplus. Moreover, a small fee increases welfare, implying that the agency model may be socially preferable to integration between platform and seller. However, the platform may set the equilibrium fee above the socially optimal level. Providing devices needed to access the marketplace (e.g., phones) induces the platform to raise the fee, whereas providing a product that competes with the seller induces a lower fee. |
| JEL: | D4 D21 L11 H22 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129704 |
| By: | Martin Peitz; Anton Sobolev |
| Abstract: | A seller can offer an experience good directly to consumers and indirectly through an intermediary. When selling indirectly, the intermediary provides recommendations based on the consumer’s match value and the prices at which the product is sold. The intermediary faces the trade-off between extracting rents from consumers who strongly care about the match value versus providing less informative recommendations but also serving consumers who do not. We analyze the allocative and welfare effects of prohibiting price parity clauses and/or regulating the intermediary’s recommender system. Prohibiting price parity clauses is always welfare decreasing in our model. |
| Keywords: | intermediation, digital platforms, price parity, recommender system, MFN clause, e-commerce |
| JEL: | L12 L15 D21 D42 M37 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_595 |
| By: | Howell, Bronwyn; Potgieter, Petrus H. |
| Abstract: | The services that run on telecommunications providers' infrastructure have evolved from essential to the day-to-day functioning to hyper critical to the minute-by-minute functioning of modern society. Telecommunications firms have however been increasingly exposed to competition and diminishing profitability. In order to face this challenge, it is essential to understand the micro-economic realities of the interaction between content providers and connectivity access providers. In this paper, we unravel options and discuss the insights revealed by micro-economic modeling of the interaction between a retailer of online content and a broadband provider. We show that heterogeneity among consumers leads to heterogeneous outcomes for the firms even where average trends are clear. One of the main results is that the absence of commercial cooperation between the content and the broadband provider delivers bad outcomes in almost all cases. The economic theory underlying the analysis is consumer willingness-to-pay and the resulting economic surplus (often, Marshallian surplus) comprising of the consumer surplus and the producer surplus. It is assumed that the content product increases the cost of delivery of the broadband product due to increased network use. The parameters that are variable are (a) the correlation between consumer valuations of the two products and (b) the additional cost of broadband provision for users of the content product. The paper presents the results of extensive simulation models for different distributions of consumer valuations and incremental additional cost for content product users. Our discrete modelling approach differs from the more common approach of assuming a continuum of consumers (i.e. not only infinitely many but uncountably infinitely many!) and solving for an optimal expected outcome. Our first step is to solve the problem for a finite number of customers and a single allocation valuations (drawn from a specified distribution). This allows one to see what might happen in concrete cases. We then do this many times and compute averages which approximates the expected outcome in the continuum case, of course. This approach allows us to identify more detail than an expected outcome does. We would like to remind the reader than the expected outcome from the roll of a die is 31 2 which is never an actual outcome. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302480 |
| By: | Pablo D. Azar; Adrian Casillas; Maryam Farboodi |
| Abstract: | This paper considers the “DeFi intermediation chain”—the market structure that underlies the creation and distribution of ETH, the native cryptocurrency of Ethereum—to examine how information asymmetry shapes intermediation rents. We argue that using proof-of-stake blockchain technology in DeFi leads to a novel limit to arbitrage, arising from the tension between arbitrageurs' privacy needs and blockchain transparency. Using a new dataset which distinguishes private and public transactions in Ethereum, we find that a 1% increase in private information advantage leads to a 1.4% increase in intermediaries' profit share. We develop a dynamic bargaining model that predicts information market power stems exclusively from participants' private information advantage. Our analysis illustrates how blockchain technology can sustain arbitrage opportunities despite low entry barriers. |
| JEL: | C83 D82 D86 G23 G29 L86 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32949 |
| By: | Jens-Uwe Franck; Martin Peitz |
| Abstract: | This paper explains the novelties for sector inquiries as a result of the 11th amendment to the German Competition Act. The Bundeskartellamt is now authorized to impose measures ranging from behavioural requirements to the unbundling of a company in order to remedy identified competition problems. The new regulatory instrument supplements antitrust law in an appropriate manner. |
| Keywords: | Competition law, sector inquiry, market investigation, New Competition Tool, Bundeskartellamt, divestiture |
| JEL: | K2 L41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_598 |
| By: | Bukvić, Rajko |
| Abstract: | This article deals with the matter of determining the level of monopolization in the insurance sector of Central Serbia during the period 2011–2022. The basis of the research were data on the total insurance premium of insurance companies, for which we calculated the market concentration coefficient and the Hirschman-Herfindahl Index (HHI), as the most popular and most commonly used measures of concentration. Their values show a (relatively) high level of concentration, but without clear tendencies in its movement, and with minimal decline overall. Based on the equivalent number, as the reciprocal (inverse) value of the HHI coefficient, an index called the monopoly market ratio or boundary index of market monopolization was proposed, showing the degree to which the market is monopolized. The values of this index during the observed period range from around 75 to 60, with a clear downward tendency, significantly more intense than the minimal decline in the concentration coefficient values. This indicates that the insurance market in Serbia is reducing the influence of monopolistic (and oligopolistic) structures during the given period and is becoming increasingly competitive, despite the decrease in the number of insurance companies in the first half of the observed period and their unaltered number since 2018. |
| Keywords: | monopolization, concentration, competition, insurance, Serbia, indicators, market shares, number of companies, equivalent number |
| JEL: | C38 D43 G22 L11 L84 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122020 |
| By: | Auriol, Emmanuelle; Gonzalez Fanfalone, Alexia |
| Abstract: | This paper studies how Mobile Network Operator (MNO) impacts traditional banks’ coverage decision in a model of vertical and horizontal differentiation with asymmetric transportation costs. The competitive pressure triggered by MNOs entry on traditional banking sector leads to prices decrease and broadens financial inclusion as the traditional banking sector expands its network in response to the entry of MNOs. The model’s predictions are checked against data from Kenya, where mobile banking has been most successful. Results from the econometric model for the period 2000-2011, suggest that, roughly, for each 7 new mobile agents in a sub-locality, one new bank branch opened. |
| Keywords: | Financial inclusion; Regulation; Mobile banking; Development |
| JEL: | G18 L51 L88 L96 O16 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129721 |
| By: | OECD |
| Abstract: | Competition authorities have developed various tools to detect cartels and substantiate the basis for opening investigations. Ex officio investigations, meaning investigations initiated by the authorities themselves, are derived from detection tools that require a higher level of proactivity from the agency, for instance, industry monitoring and cartel screenings. New technologies such as artificial intelligence also provide competition authorities with greater opportunities to improve their detection tools. This paper provides an overview of detection tools to launch ex officio cartel investigations, including recent trends and experiences from Latin America and the Caribbean. It concludes by highlighting the need for competition authorities to implement a variety of approaches to complement one another and enhance cartel detection. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:311-en |
| By: | Simplice A. Asongu (Johannesburg, South Africa); Emeride F. Kayo (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon); Therese E. Zogo (Yaoundé, Cameroon) |
| Abstract: | Purpose – This article analyses the effect of bank concentration on women's political empowerment in 80 developing countries over the period 2004-2020. Design/methodology/approach – Banking concentration (BC) is measured by the assets held by the three largest commercial banks as a percentage of total commercial bank assets in a country. We use several indices to measure political empowerment, namely: the political empowerment index, composed of three indices (i.e., the women's civil liberties index, the women's participation in civil society index and the women's political participation index). The empirical evidence is based on the Ordinary Least Squares (OLS) and Fixed Effects (FE) techniques. Findings – The following findings are established. Banking concentration reduces women's political empowerment. Furthermore, information sharing offices (i.e. public credit registries and private credit bureaus) mitigate the negative effect of bank concentration on women’s political empowerment. Information sharing thresholds that are needed to completely dampen the negative effect of bank concentration on women’s political empowerment are provided. Policy implications are discussed, notably: (i) that governments in developing countries increase competition by easing barriers to entry for potential banks, to facilitate the transition from confiscatory concentration to distributive concentration favorable to all stakeholders; and (ii) information sharing offices should be consolidated beyond the established thresholds in order to completely crowd-out the unfavorable effect of bank concentration of women’s political empowerment. Originality/value – The paper provides new empirical evidence that helps to advance the debate on the effects of banking concentration and information sharing in the banking sector on women's political empowerment in developing countries. |
| Keywords: | Banking concentration; women political empowerment; OLS; Fixed Effects |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:aak:wpaper:24/006 |
| By: | OECD |
| Abstract: | Interim measures are enforcement tools available to competition authorities to prevent harm to competition that may occur before a final decision on the existence of an infringement. Most often these decisions are related to an ongoing business practice that may potentially constitute an abuse of dominance infringement, when a dominant market player illegally engages in practices limiting competition. In Latin America and the Caribbean (LAC) countries, most competition authorities dispose of interim measures in their legal frameworks and many have used them in past years (e.g. Argentina, Brazil, Chile, Colombia, Dominican Republic, Paraguay and Peru). This paper provides an overview of the state of play of interim measures in the region covering legal frameworks, recent enforcement experiences, as well as challenges and particularities of LAC countries. The paper highlights that interim measures represent a powerful tool for competition authorities and should be carefully used to mitigate enforcement errors and related reputation risks. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:312-en |
| By: | Vladimir A. Karamychev (Erasmus University Rotterdam) |
| Abstract: | Aftermarket social welfare is largely determined by a procurement auction design. Auctions select firms for operating aftermarkets, and auctions may also impose restrictions on aftermarket prices the winner can charge. This paper compares aftermarket social welfare generated by first-price and second-price procurement auctions. It reveals that the social welfare ranking depends on the monotonicity properties of the augmented demand elasticity, defined as a product of the demand elasticity and the firm’s relative markup. When the augmented elasticity is price independent, first-price and second-price procurement auctions are welfare-equivalent. When it increases (or decreases) with price, first-price (or second-price) auctions are welfare-superior. |
| Keywords: | Aftermarket, Procurement auctions, Social Welfare, Monopoly |
| JEL: | D44 H57 L12 |
| Date: | 2023–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20230081 |
| By: | Pápai, Zoltán; McLean, Aliz; Bukur, Tamás |
| Abstract: | This study examines the changes in consumer prices within the fixed broadband market in Hungary between 2020 and 2023, a period marked by unprecedented, government-backed market consolidation. Leveraging a hedonic price regression methodology, we inspect price changes in the context of internet service provider (ISP) differences, inflation, and various service features offered in broadband plans. The hedonic method allows for quality-adjusted price tracking over time, in addition to offering insights into the intrinsic value placed on various plan characteristics by consumers. We demonstrate that the hedonic methodology holds significant value for regulators and market players in developing effective price monitoring systems. Our analysis reveals that following the market consolidation, the previously stagnant price level increased, and the pricing strategies of the three major service providers underwent notable transformations. The two providers involved in the consolidation significantly raised their prices, with Vodafone becoming the most expensive provider in the country and Digi nearly losing its price advantage. By the end of the period, the third player, Telekom, offered more favourable hedonic prices compared to 2020. The cumulative increase in the average hedonic price index over the examined period was almost 20%, remaining significantly below the change in the consumer price index. The estimated intrinsic prices of the various fixed broadband plan characteristics are consistent with previous literature. The study underlines the utility of the hedonic methodology in providing nuanced insights into ISP pricing behaviour and fixed retail telecom market dynamics. The study opens up potential areas for future research, such as extending the analysis to television and voice telephony and monitoring future trends in light of the recent changes in market structure. |
| Keywords: | hedonic regression, telecommunications, fixed broadband, pricing, Hungary |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302499 |
| By: | OECD |
| Abstract: | This paper examines the recent evolution of competition in the financial services sector in Latin America and the Caribbean (LAC), focusing on the rise of Fintechs and the emergence of a pro-competitive regulatory framework. This evolution results from a symbiosis of positive feedback between technology and regulation, which reinforce and balance each other in shaping a new era for the sector in the LAC region. Over the last decade, the financial sector in LAC has undergone profound changes, including the entry of new players, the emergence of new products and the reconfiguration of market boundaries. These developments have led to competitive gains and the provision of better, more accessible, customised and inclusive financial services. Regulatory advances have played a crucial role at various stages of this process, sometimes laying the groundwork, sometimes welcoming and protecting new technologies and models driven by financial digitalisation, and more recently, even leading and fostering disruptive innovations. Open Banking currently stands as a key element of this shared agenda, both regionally and globally, aimed at deepening market transformation towards greater competition, innovation and inclusion. |
| Date: | 2024–09–27 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:313-en |
| By: | Laorrojwong, Benyathip; Makarathat, Natchaya |
| Abstract: | The Open RAN model has recently been put to the forefront of debate on how the open networking technologies would benefit the telecom operator, vendors and tech sectors in terms of competition, freedom, and openness. The Open RAN has introduced an open interface which allows telecom operators to choose their own combinations of hardware and software. In other words, Open RAN might be replacing the traditional/old model, which offers bundle hardware and software, already integrated , in a monolithic architecture. The traditional 5G tech architect uses proprietary equipment to connect devices to the network. This means all parts (hardware and software) of 5G network are manufactured by the same company. While this architecture guarant ees compatibility and operability of the network, it also leads to the conduct of monopolies in the market as well as technology dependency. The new invention of Open RAN model, in contrast, supports the disaggregation of hardware and software. In the simple terms, the operating system will come from Company A, antennas and cells will come from Company B, and a microchip will be used from Company C. This type of network architecture is designed to reduce the risk of dependencies and disrupt the nature of 5G monopolistic market. The initial purpose of the Open RAN, in this sense, is aimed at developing 5G network technology by using open interfaces, allowing operators to be able to use equipment from different manufacture. From the economics perspective, Open RAN model promotes competition and innovations, avoids the formation of tech oligopolies, diversifies suppliers and mitigates risks, and importantly leads to a decoupling of bi-polarization of the U.S. and Chinese technology. |
| Keywords: | Open-RAN, Economics, Competition, Geopolitics, Bi-polarization, Conflicts, Technology policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302455 |
| By: | Sahana Simha; M. P. Ram Mohan |
| Abstract: | Trademark law is primarily viewed as a consumer protection law. Proprietary and consumer interests are not always balanced. This is especially evident in the doctrine of exhaustion of rights in trademarks, where the trademark owner loses control over the further distribution of their trademarked product once sold. Existing statutory exceptions to this doctrine allow the proprietor to take action against resellers only when the product has been impaired or changed. The exceptions do not account for harm or damage to the reputation and goodwill associated with a trademark as a ground to override exhaustion. This paper analyses legislative and judicial decisions regarding exceptions to exhaustion under Indian trademark law, with a comparative examination of rulings from the US and EU jurisdictions. We then highlight the theoretical differences between trademark and copyright law, exploring moral rights in copyright law and the anti-dilution theory of trademarks. In doing so, we examine the feasibility of expanding exceptions to the doctrine of exhaustion to include proprietary concerns, in addition to consumer and market considerations. |
| Date: | 2024–09–27 |
| URL: | https://d.repec.org/n?u=RePEc:iim:iimawp:14715 |
| By: | Pisarkiewicz, Anna Renata; Parcu, Pier Luigi |
| Abstract: | The digital economy, which keeps transforming how people and businesses interact and operate, has certain distinctive characteristics that pose unique challenges for regulators. It is highly dynamic and driven by innovation, which in comparison to the past, happens at a much faster pace and is more disruptive. It is technology-based and, more than before, data-driven, which means that it requires notable ICT and analytic capabilities and the ability to interpret and make decisions based on vast amounts of data. For example, to understand the economies of scale in search and the value of targeted advertising, the UK CMA requested and analysed over 4TB of data from Google and Bing during its market study on digital advertising (Hunt, 2022). Moreover, the digital economy with its corresponding digital regulations is increasingly complex and interconnected, making it difficult for regulators to understand and coherently regulate specific problems or components without examining entire digital and regulatory ecosystems. The digital economy also transcends traditional sectoral silos as well as territorial and jurisdictional limitations, thereby presenting challenges in terms of ensuring harmonized regulatory frameworks and effective compliance across different national authorities and different geographical realities. The German Facebook (Meta) case and the subsequent preliminary ruling from the EU perfectly illustrate both the increasingly blurred lines between data protection and competition law enforcement as well as a need for coordination and collaboration between the respective regulators. Finally, the global and interconnected nature of the digital economy creates important dependencies and vulnerabilities that regulators must understand and navigate, which exposes regulation to geopolitical tensions. The interplay between merger control and foreign direct investment (FDI) screening, for example, in cases involving semiconductors shows how regulatory frameworks must adapt to address these dependencies and vulnerabilities, ensuring that economic considerations are balanced with national security interests amidst rising geopolitical tensions. |
| Keywords: | Regulatory agility, digital markets, enforcement, VUCA framework, collaborative regulation, technological gap, technological proficiency, innovative policymaking, competences |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302491 |
| By: | Riukula, Krista; Väänänen, Touko |
| Abstract: | Abstract Effects on labour market outcomes are often referred to when discussing the wider economic benefits of transport projects. However, research on the topic in the Finnish context is scarce. Thus, proponents of transport projects may put exaggerated hopes on the labour market effects when arguing for the projects. This review aims to give researchers a good starting point for analyzing the labour market effects of transport projects in Finland. We review theoretical frameworks and recent empirical literature on the effects of transport projects and accessibility on the labour market. We discuss the available data sources in Finland and methodological considerations for analyzing causal effects. Furthermore, we explore the integration of labour market impacts into cost-benefit analyses considering, for example, the risk of double-counting benefits. |
| Keywords: | Transport project, Labour market, Wider economic impacts, Empirical research |
| JEL: | R42 H43 J68 H54 |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:120 |
| By: | Marco Boccaccio (Università Sapienza di Roma - Dipartimento di Studi Giuridici ed Economici) |
| Abstract: | La politica dela concorrenza è una finestra per comprendere il modo in cui è cambiato nel il ruolo dello Stato in economia. Due paradigmi si sono succeduti in un andamento pendolare, quello di adjudication basato sull’intervento ex post per correggere comportmenti in violazione edlle norme, e quello di regulation volto a discplinare ex ante comportamenti futuri. |
| Keywords: | government intervention; antitrust; law and economics |
| JEL: | A12 H10 K00 K L |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:gfe:pfrp00:00065 |
| By: | Howell, Bronwyn; Potgieter, Petrus H. |
| Abstract: | This paper critically examines the effectiveness of spectrum set-asides as a policy tool to address distributional objectives in telecommunications across four diverse national contexts: Canada, New Zealand, South Africa, and the United States. Spectrum allocation is a crucial factor for the provision of telecommunications services and by extension, for citizens' participation in the digital economy. While economic theory supports auction-based allocations to maximize market efficiency, set-asides aim to facilitate access for disadvantaged groups or to stimulate competition. This study employs case studies from the selected countries to evaluate the impact of these set-asides on market efficiency, competition, and economic development. In Canada, set-asides intended to encourage new market entrants have led to higher spectrum costs and inefficiencies due to speculative behaviour. In New Zealand, allocations to the indigenous M¯aori population have raised concerns over long-term sector efficiency and capital accessibility. South Africa's policy mandates spectrum allocations to entities with significant ownership by historically disadvantaged persons, with mixed outcomes on market dynamics and social equity. Meanwhile, the United States' approach includes grants rather than direct spectrum set-asides, offering a potentially less distortive model. The findings suggest that while set-asides can support social objectives, they often introduce inefficiencies and fail to achieve the desired economic outcomes. The paper concludes by discussing the implications for future spectrum policy, advocating for careful consideration of the trade-offs between equity and efficiency in spectrum management. |
| Keywords: | Spectrum Allocation, Telecommunications Policy, Digital Economy, Market Efficiency, Competitive Supply, Economic Development, Regulatory Strategies |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302463 |